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Should You Take Comfort From Insider Transactions At Endeavour Mining Corporation (TSE:EDV)?

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Simply Wall St
·4 min read
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Endeavour Mining Corporation (TSE:EDV).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

View our latest analysis for Endeavour Mining

Endeavour Mining Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Naguib Onssy Sawiris for CA$12m worth of shares, at about CA$34.17 per share. That means that an insider was happy to buy shares at above the current price of CA$27.39. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months insiders purchased 659.35k shares for CA$14m. But insiders sold 281.93k shares worth CA$8.9m. In total, Endeavour Mining insiders bought more than they sold over the last year. They paid about CA$20.73 on average. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
insider-trading-volume

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Endeavour Mining Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Endeavour Mining shares. Specifically, insiders ditched CA$2.0m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Endeavour Mining insiders own 0.6% of the company, worth about CA$29m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Endeavour Mining Tell Us?

Insiders sold Endeavour Mining shares recently, but they didn't buy any. On the other hand, the insider transactions over the last year are encouraging. We like that insiders own a fair amount of the company. So we're happy enough to look past some selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Endeavour Mining. In terms of investment risks, we've identified 4 warning signs with Endeavour Mining and understanding them should be part of your investment process.

But note: Endeavour Mining may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.